The State Bank of Viet Nam has recently decided to increase credit room by 1.5-2% for credit institutions, equivalent to about VND 240,000 billion to be pumped into the economy from now until the end of 2022.

Transaction activities at the South Da Nang branch of the Agribank. Photo: M.Q

Expressing their joy at the aforementioned information, many Da Nang-based businesses hope that they will soon access loans to serve year-end production.

According to the announcement made by the State Bank of Viet Nam, credit growth has till date reached 12.2%, lower than the limit of 14%. In addition, there will be 1.5-2% increase in credit room for the coming time. This means there is quite a lot of room for commercial banks to provide more capital for businesses and the economy when there are only more than half a month left until the end of 2022.

Dr. Nguyen Trong Hieu, Vice Chairman of the municipal Young Entrepreneurs’ Association cum Chairman of the Board of Members of ECOVIS AFA Viet Nam Auditing - Valuation and Consulting Co., Ltd, assessed that this is a necessary policy to solve the liquidity problems of both commercial banks and the economy in the current period.

He highlighted that the expansion of the credit growth at this time provided year-end working capital for businesses that are ‘thirsty’ for capital, thereby creating conditions for businesses to access loans with preferential interest rates, and at the same time satisfy their capital needs for post-pandemic socio-economic recovery plans.

According to Mr. Phan Phuoc Loc, Director of the Dai Phuoc Long JSC, expanding credit room is a positive move for the business community. Therefore, these businesses express their hope that the policy will be implemented quickly, and the reduction of lending interest rates will be synchronized.

Similarly, Director of the Ba Loc Sandpaper Glue Manufacturing Company Limited Nguyen Thanh Phuoc, said that many businesses are short of orders, and facing a significant decrease in their production activities. Meanwhile, while interest rates on bank loans continue to increase. If the business cannot prove their ability to repay loans, it is also very difficult for them to access loan capital.

Dr. Nguyen Trong Hieu also further analyzed that the expansion of the credit room is a positive policy, but it was issued quite late. Also, loan conditions must ensure credit risk control, so it is difficult for businesses to absorb all the capital of about VND240,000 billion from the State Bank of Viet Nam's 1.5-2% expansion of the credit room.

“The State Bank of Viet Nam requires credit institutions to balance appropriate capital to grant credit to production and business sectors, especially the city’s priority areas” Dr. Hieu said.

Mr. Vo Minh, Director of the Da Nang branch of the State Bank of Viet Nam, said that with the expansion of the credit room this time, some banks will be allowed to expand the credit room by 1.5 or 2%, or not.

The above adjustment aims to ensure that credit institutions have better liquidity, and those that are reducing lending rates or lower interest rates will be higher credit growth. This is one of the policies to encourage commercial banks to reduce lending rates.

Currently, the city branch of the State Bank of Viet Nam continues to monitor and direct commercial banks citywide to allocate capital sources for such priority areas as agriculture, export, small and medium-sized enterprises, and supporting industries. Besides, importance will be attached to giving capital sources for social housing loans.

In addition to solutions from the State Bank of Vietnam and credit institutions, businesses are in need to restructure their operations, prove their capacity, and build confidence with banks.

Reporting by M.QUE - Translating by M.DUNG